Quiz 9: Application: International Trade

Trade decisions are based on the principle of absolute advantage.

The sum of consumer and producer surplus measures the total benefits that buyers and sellers receive from participating in a market.

According to the principle of comparative advantage,all countries can benefit from trading with one another because trade allows each country to specialize in doing what it does best.

The world price of cotton is the highest price of cotton observed anywhere in the world.

If the world price of a good is greater than the domestic price in a country that can engage in international trade,then that country becomes an importer of that good.

Without free trade,the domestic price of a good must be equal to the world price of a good.

The nation of Aviana soon will abandon its no-trade policy and adopt a free-trade policy.If the world price of goose meat is $3 per pound and the domestic price of goose meat without trade is $2 per pound,then Aviana should export goose meat.

If Argentina exports oranges to the rest of the world,Argentina's producers of oranges are worse off,and Argentina's consumers of oranges are better off,as a result of trade.

If a country's domestic price of a good is lower than the world price,then that country has a comparative advantage in producing that good.

When a country allows international trade and becomes an importer of a good,domestic producers of the good are better off,and domestic consumers of the good are worse off.

If the United Kingdom imports tea cups from other countries,then U.K.producers of tea cups are better off,and U.K.consumers of tea cups are worse off,as a result of trade.

If Belgium exports chocolate to the rest of the world,then Belgian chocolate producers benefit from higher producer surplus,Belgian chocolate consumers are worse off because of lower consumer surplus,and total surplus in Belgium increases because of the exports of chocolate.

In principle,trade can make a nation better off,because the gains to the winners exceed the losses to the losers.

Suppose the Ivory Coast,a small country,imports wheat at the world price of $4 per bushel.If the Ivory Coast imposes a tariff of $1 per bushel on imported wheat,then,other things equal,the price of wheat in Ivory Coast will increase,but by less than $1.

The small-economy assumption is necessary to analyze the gains and losses from international trade.

The greater the elasticities of supply and demand,the smaller are the gains from trade.

If a tariff is placed on watches,the price of both domestic and imported watches will rise by the amount of the tariff.

When a government imposes a tariff on a product,the domestic price will equal the world price.

A tariff increases the quantity of imports and moves the market farther from its equilibrium without trade.

When a country abandons no-trade policies in favor of free-trade policies and becomes an importer of steel,then the domestic price of steel will increase as a result.

When a country that imports shoes imposes a tariff on shoes,buyers of shoes in that country become worse off.

When a country that imports shoes imposes a tariff on shoes,buyers of shoes in that country become worse off and sellers of shoes in that country become better off.

Deadweight loss measures the decrease in total surplus that results from a tariff or quota.

If a small country imposes a tariff on an imported good,domestic sellers will gain producer surplus,the government will gain tariff revenue,and domestic consumers will gain consumer surplus.

Domestic consumers gain and domestic producers lose when the government imposes a tariff on imports.

The imposition of a tariff on imported wine will increase the domestic price of wine,decrease the quantity of wine imported,and increase the quantity of wine produced domestically.

Suppose that Australia imposes a tariff on imported beef.If the increase in producer surplus is $100 million,the increase in tariff revenue is $200 million,and the reduction in consumer surplus is $500 million,the deadweight loss of the tariff is $300 million.

Suppose Ecuador imposes a tariff on imported bananas.If the increase in producer surplus is $50 million,the reduction in consumer surplus is $150 million,and the deadweight loss of the tariff is $30 million,then the tariff generates $130 million in revenue for the government.

Tariffs cause deadweight loss because they move the price of an imported product closer to the equilibrium without trade,thus reducing the gains from trade.

Import quotas and tariffs both cause the quantity of imports to fall.

Import quotas and tariffs make domestic sellers better off and domestic buyers worse off.

Economists agree that trade ought to be restricted if free trade means that domestic jobs might be lost because of foreign competition.

Free trade causes job losses in industries in which a country does not have a comparative advantage,but it also causes job gains in industries in which the country has a comparative advantage.

Most economists support the infant-industry argument because it is so easy to implement in practice.

If Honduras were to subsidize the production of wool blankets and sell them in Sweden at artificially low prices,the Swedish economy would be worse off.

Policymakers often consider trade restrictions in order to protect domestic producers from foreign competitors.

GATT is an example of a successful unilateral approach to achieving free trade.

NAFTA is an example of a multilateral approach to achieving free trade.

The rules established under the General Agreement on Tariffs and Trade (GATT)are enforced by an international body called the World Trade Organization (WTO).

A multilateral approach to free trade has greater potential to increase the gains from trade than a unilateral approach,because the multilateral approach can reduce trade restrictions abroad as well as at home.

The results of a 2007 Los Angeles Times poll suggest that a significant majority of Americans believe that free international trade helps the American economy.

The results of a 2007 Los Angeles Times poll suggest that the percentage of Americans who believe trade is harmful to the economy exceeds the percentage of Americans who believe trade is beneficial to the economy.

Most economists view the United States as an ongoing experiment that raises serious doubts about the virtues of free trade.

How does an import quota differ from an equivalent tariff?

Characterize the two different approaches a nation can take to achieve free trade.Does one approach have an advantage over the other?

What are the arguments in favor of trade restrictions,and what are the counterarguments? According to most economists,do any of these arguments really justify trade restrictions? Explain.

An important factor in the decline of the U.S.textile industry over the past 100 or so years is A) foreign competitors that can produce quality textile goods at low cost. B) lower prices of goods that are substitutes for clothing. C) a decrease in Americans' demand for clothing,due to increased incomes and the fact that clothing is an inferior good. D) the fact that the minimum wage in the U.S.has failed to keep pace with the cost of living.

With which of the Ten Principles of Economics is the study of international trade most closely connected? A) People face tradeoffs. B) Trade can make everyone better off. C) Governments can sometimes improve market outcomes. D) Prices rise when the government prints too much money.

Which of the following tools and concepts is useful in the analysis of international trade? A) total surplus B) domestic supply C) equilibrium price D) All of the above are correct.

A logical starting point from which the study of international trade begins is A) the recognition that not all markets are competitive. B) the recognition that government intervention in markets sometimes enhances the economic welfare of the society. C) the principle of absolute advantage. D) the principle of comparative advantage.

What is the fundamental basis for trade among nations? A) shortages or surpluses in nations that do not trade B) misguided economic policies C) absolute advantage D) comparative advantage

Patterns of trade among nations are primarily determined by A) cultural considerations. B) political considerations. C) comparative advantage. D) differences in the income elasticity of demand among nations.

The nation of Pineland forbids international trade.In Pineland,you can buy 1 pound of fish for 2 pounds of beef.In other countries,you can buy 1 pound of fish for 1.5 pounds of beef.These facts indicate that A) Pineland has a comparative advantage,relative to other countries,in producing fish. B) other countries have a comparative advantage,relative to Pineland,in producing beef. C) the price of beef in Pineland exceeds the world price of beef. D) if Pineland were to allow trade,it would import fish.

The nation of Waterland forbids international trade.In Waterland,you can obtain a computer by trading 2 bicycles.In other countries,you can obtain a computer by trading 3 bicycles.These facts indicate that A) if Waterland were to allow trade,it would export computers. B) Waterland has an absolute advantage,relative to other countries,in producing computers. C) Waterland has a comparative advantage,relative to other countries,in producing bicycles. D) All of the above are correct.

The principle of comparative advantage asserts that A) not all countries can benefit from trade with other countries. B) the world price of a good will prevail in all countries,regardless of whether those countries allow international trade in that good. C) countries can become better off by exporting goods,but they cannot become better off by importing goods. D) countries can become better off by specializing in what they do best.

A tax on an imported good is called a A) quota. B) tariff. C) supply tax. D) trade tax.

A tariff is a A) limit on how much of a good can be exported. B) limit on how much of a good can be imported. C) tax on an exported good. D) tax on an imported good.

The price of a good that prevails in a world market is called the A) absolute price. B) relative price. C) comparative price. D) world price.

The price of sugar that prevails in international markets is called the A) export price of sugar. B) import price of sugar. C) comparative-advantage price of sugar. D) world price of sugar.

If a country allows trade and,for a certain good,the domestic price without trade is higher than the world price, A) the country will be an exporter of the good. B) the country will be an importer of the good. C) the country will be neither an exporter nor an importer of the good. D) Additional information is needed about demand to determine whether the country will be an exporter of the good,an importer of the good,or neither.

If a country allows trade and,for a certain good,the domestic price without trade is lower than the world price, A) the country will be an exporter of the good. B) the country will be an importer of the good. C) the country will be neither an exporter nor an importer of the good. D) Additional information is needed about demand to determine whether the country will be an exporter of the good,an importer of the good,or neither.

For any country,if the world price of zinc is higher than the domestic price of zinc without trade,that country should A) export zinc,since that country has a comparative advantage in zinc. B) import zinc,since that country has a comparative advantage in zinc. C) neither export nor import zinc,since that country cannot gain from trade. D) neither export nor import zinc,since that country already produces zinc at a low cost compared to other countries.

If the world price of textiles is higher than Vietnam's domestic price of textiles without trade,then Vietnam A) should import textiles. B) has a comparative advantage in textiles. C) should produce just enough textiles to meet its domestic demand. D) should refrain altogether from producing textiles.

Assume,for Singapore,that the domestic price of soybeans without international trade is higher than the world price of soybeans.This suggests that,in the production of soybeans, A) Singapore has a comparative advantage over other countries and Singapore will import soybeans. B) Singapore has a comparative advantage over other countries and Singapore will export soybeans. C) other countries have a comparative advantage over Singapore and Singapore will import soybeans. D) other countries have a comparative advantage over Singapore and Singapore will export soybeans.

Assume,for the U.S. ,that the domestic price of beef without international trade is lower than the world price of beef.This suggests that,in the production of beef, A) the U.S.has a comparative advantage over other countries and the U.S.will export beef. B) the U.S.has a comparative advantage over other countries and the U.S.will import beef. C) other countries have a comparative advantage over the U.S.and the U.S.will export beef. D) other countries have a comparative advantage over the U.S.and the U.S.will import beef.

Suppose the United States exports cars to France and imports cheese from Switzerland.This situation suggests that A) the United States has a comparative advantage relative to Switzerland in producing cheese,and France has a comparative advantage relative to the United States in producing cars. B) the United States has a comparative advantage relative to France in producing cars,and Switzerland has a comparative advantage relative to the United States in producing cheese. C) the United States has an absolute advantage relative to Switzerland in producing cheese,and France has an absolute advantage relative to the United States in producing cars. D) the United States has an absolute advantage relative to France in producing cars,and Switzerland has an absolute advantage relative to the United States in producing cheese.

Trade among nations is ultimately based on A) absolute advantage. B) strategic advantage. C) comparative advantage. D) technical advantage.

A country has a comparative advantage in a product if the world price is A) lower than that country's domestic price without trade. B) higher than that country's domestic price without trade. C) equal to that country's domestic price without trade. D) not subject to manipulation by organizations that govern international trade.

Suppose Puerto Rico has a comparative advantage over other countries in producing sugar,but other countries have an absolute advantage over Puerto Rico in producing sugar.If trade in sugar is allowed,Puerto Rico A) will import sugar. B) will export sugar. C) will either export sugar or export sugar,but it is not clear from the given information. D) would have nothing to gain either from exporting or importing sugar.

Suppose Haiti has an absolute advantage over other countries in producing oranges,but other countries have a comparative advantage over Haiti in producing oranges.If trade in oranges is allowed,Haiti A) will import oranges. B) will export oranges. C) will either export oranges or export oranges,but it is not clear from the given information. D) would have nothing to gain either from exporting or importing oranges.

When a country that imported a particular good abandons a free-trade policy and adopts a no-trade policy, A) producer surplus increases and total surplus increases in the market for that good. B) producer surplus increases and total surplus decreases in the market for that good. C) producer surplus decreases and total surplus increases in the market for that good. D) producer surplus decreases and total surplus decreases in the market for that good.

When,in our analysis of the gains and losses from international trade,we assume that a country is small,we are in effect assuming that the country A) cannot experience significant gains or losses by trading with other countries. B) cannot have a significant comparative advantage over other countries. C) cannot affect world prices by trading with other countries. D) All of the above are correct.

When,in our analysis of the gains and losses from international trade,we assume that a particular country is small,we are A) assuming the domestic price before trade will continue to prevail once that country is opened up to trade with other countries. B) assuming there is no demand for that country's domestically-produced goods by other countries. C) assuming international trade can benefit producers,but not consumers,in that country. D) making an assumption that is not necessary to analyze the gains and losses from international trade.

In analyzing international trade,we often focus on a country whose economy is small relative to the rest of the world.We do so A) because it is impossible to analyze the gains and losses from international trade without making this assumption. B) because then we can assume that world prices of goods are unaffected by that country's participation in international trade. C) in order to rule out the possibility of tariffs or quotas. D) All of the above are correct.

In analyzing the gains and losses from international trade,to say that Moldova is a small country is to say that A) Moldova can only import goods;it cannot export goods. B) Moldova's choice of which goods to export and which goods to import is not based on the principle of comparative advantage. C) only the domestic price of a good is relevant for Moldova;the world price of a good is irrelevant. D) Moldova is a price taker.

When a country allows trade and becomes an exporter of a good, A) domestic producers gain and domestic consumers lose. B) domestic producers lose and domestic consumers gain. C) domestic producers and domestic consumers both gain. D) domestic producers and domestic consumers both lose.

Trade enhances the economic well-being of a nation in the sense that A) both domestic producers and domestic consumers of a good become better off with trade,regardless of whether the nation imports or exports the good in question. B) the gains of domestic producers of a good exceed the losses of domestic consumers of a good,regardless of whether the nation imports or exports the good in question. C) trade results in an increase in total surplus. D) trade puts downward pressure on the prices of all goods.

When a country allows trade and becomes an importer of a good, A) both domestic producers and domestic consumers become better off. B) domestic producers become better off,and domestic consumers become worse off. C) domestic producers become worse off,and domestic consumers become better off. D) both domestic producers and domestic consumers become worse off.

When a country allows trade and becomes an importer of a good, A) everyone in the country benefits. B) the gains of the winners exceed the losses of the losers. C) the losses of the losers exceed the gains of the winners. D) everyone in the country loses.

When the nation of Worldova allows trade and becomes an exporter of silk, A) residents of Worldova who produce silk become worse off;residents of Worldova who buy silk become better off;and the economic well-being of Worldova rises. B) residents of Worldova who produce silk become worse off;residents of Worldova who buy silk become better off;and the economic well-being of Worldova falls. C) residents of Worldova who produce silk become better off;residents of Worldova who buy silk become worse off;and the economic well-being of Worldova rises. D) residents of Worldova who produce silk become better off;residents of Worldova who buy silk become worse off;and the economic well-being of Worldova falls.

When the nation of Duxembourg allows trade and becomes an importer of software, A) residents of Duxembourg who produce software become worse off;residents of Duxembourg who buy software become better off;and the economic well-being of Duxembourg rises. B) residents of Duxembourg who produce software become worse off;residents of Duxembourg who buy software become better off;and the economic well-being of Duxembourg falls. C) residents of Duxembourg who produce software become better off;residents of Duxembourg who buy software become worse off;and the economic well-being of Duxembourg rises. D) residents of Duxembourg who produce software become better off;residents of Duxembourg who buy software become worse off;and the economic well-being of Duxembourg falls.

When a nation first begins to trade with other countries and the nation becomes an importer of corn, A) this is an indication that the world price of corn exceeds the nation's domestic price of corn in the absence of trade. B) this is an indication that the nation has a comparative advantage in producing corn. C) the nation's consumers of corn become better off and the nation's producers of corn become worse off. D) All of the above are correct.

When a nation first begins to trade with other countries and the nation becomes an exporter of soybeans, A) this is an indication that the world price of soybeans exceeds the nation's domestic price of soybeans in the absence of trade. B) this is an indication that the nation has a comparative advantage in producing soybeans. C) the nation's consumers of soybeans become worse off and the nation's producers of soybeans become better off. D) All of the above are correct.

Trade raises the economic well-being of a nation in the sense that A) the gains of the winners exceed the losses of the losers. B) everyone in an economy gains from trade. C) since countries can choose what products to trade,they will pick those products that are most beneficial to society. D) the nation joins the international community when it begins to engage in trade.

When a country allows trade and becomes an exporter of a good, A) the gains of the domestic producers of the good exceed the losses of the domestic consumers of the good. B) the gains of the domestic consumers of the good exceed the losses of the domestic producers of the good. C) the losses of the domestic producers of the good exceed the gains of the domestic consumers of the good. D) the losses of the domestic consumers of the good exceed the gains of the domestic producers of the good.

When a country allows trade and becomes an importer of steel, A) the losses of the domestic producers of steel exceed the gains of the domestic consumers of steel. B) the losses of the domestic consumers of steel exceed the gains of the domestic producers of steel. C) the gains of the domestic producers of steel exceed the losses of the domestic consumers of steel. D) the gains of the domestic consumers of steel exceed the losses of the domestic producers of steel.

When a country allows trade and becomes an exporter of a good,which of the following is not a consequence? A) The price paid by domestic consumers of the good increases. B) The price received by domestic producers of the good increases. C) The losses of domestic consumers of the good exceed the gains of domestic producers of the good. D) The gains of domestic producers of the good exceed the losses of domestic consumers of the good.

When a country allows trade and becomes an importer of bottled water,which of the following is not a consequence? A) The gains of domestic consumers of bottled water exceed the losses of domestic producers of bottled water. B) The losses of domestic producers of bottled water exceed the gains of domestic consumers of bottled water. C) The price paid by domestic consumers of bottled water decreases. D) The price received by domestic producers of bottled water decreases.

When a country allows trade and becomes an exporter of a good, A) consumer surplus and producer surplus both increase. B) consumer surplus and producer surplus both decrease. C) consumer surplus increases and producer surplus decreases. D) consumer surplus decreases and producer surplus increases.

When a country allows trade and becomes an importer of a good, A) consumer surplus and producer surplus both increase. B) consumer surplus and producer surplus both decrease. C) consumer surplus increases and producer surplus decreases. D) consumer surplus decreases and producer surplus increases.

Figure 9-1 The figure illustrates the market for wool in New Zealand. -Refer to Figure 9-1.From the figure it is apparent that A) New Zealand will experience a shortage of wool if trade is not allowed. B) New Zealand will experience a surplus of wool if trade is not allowed. C) New Zealand has a comparative advantage in producing wool,relative to the rest of the world. D) foreign countries have a comparative advantage in producing wool,relative to New Zealand.

Figure 9-1 The figure illustrates the market for wool in New Zealand. -Refer to Figure 9-1.From the figure it is apparent that A) New Zealand will export wool if trade is allowed. B) New Zealand will import wool if trade is allowed. C) New Zealand has nothing to gain either by importing or exporting wool. D) the world price will fall if New Zealand begins to allow its citizens to trade with other countries.

Figure 9-1 The figure illustrates the market for wool in New Zealand. -Refer to Figure 9-1.With trade,New Zealand will A) export 11 units of wool. B) export 5 units of wool. C) import 15 units of wool. D) import 6 units of wool.

Figure 9-1 The figure illustrates the market for wool in New Zealand. -Refer to Figure 9-1.In the absence of trade,the equilibrium price of wool in New Zealand is A) $15. B) $45. C) $55. D) $70.

Figure 9-1 The figure illustrates the market for wool in New Zealand. -Refer to Figure 9-1.In the absence of trade,total surplus in New Zealand is represented by the area A) A + B + C. B) A + B + C + D + F. C) A + B + C + D + F + G. D) A + B + C + D + F + G + H.

Figure 9-1 The figure illustrates the market for wool in New Zealand. -Refer to Figure 9-1.When trade in wool is allowed,consumer surplus in New Zealand A) increases by the area B + D. B) increases by the area C + F. C) decreases by the area B + D. D) decreases by the area D + G.

Figure 9-1 The figure illustrates the market for wool in New Zealand. -Refer to Figure 9-1.When trade in wool is allowed,producer surplus in New Zealand A) increases by the area B + D. B) increases by the area B + D + G. C) decreases by the area C + F. D) decreases by the area G.

Figure 9-1 The figure illustrates the market for wool in New Zealand. -Refer to Figure 9-1.When trade is allowed, A) New Zealand producers of wool become better off and New Zealand consumers of wool become worse off. B) New Zealand consumers of wool become better off and New Zealand producers of wool become worse off. C) both New Zealand producers and consumers of wool become better off. D) both New Zealand producers and consumers of wool become worse off.

Figure 9-1 The figure illustrates the market for wool in New Zealand. -Refer to Figure 9-1.Relative to the no-trade situation,trade with the rest of the world results in A) New Zealand consumers paying a higher price for wool. B) a decrease in producer surplus in New Zealand. C) a decrease in total surplus in New Zealand. D) All of the above are correct.

Figure 9-1 The figure illustrates the market for wool in New Zealand. -Refer to Figure 9-1.In the absence of trade,total surplus in the New Zealand wool market amounts to A) 187.5 B) 275.0 C) 378.5 D) 412.5

Figure 9-1 The figure illustrates the market for wool in New Zealand. -Refer to Figure 9-1.With trade,total surplus in the New Zealand wool market amounts to A) 312.5. B) 367.0. C) 467.5. D) 495.0.

Which of the following statements is true? A) Free trade benefits a country when it exports but harms it when it imports. B) "Voluntary" limits on Canadian exports of hogs are better for the United States than U.S.tariffs placed on Canadian hog exports. C) Tariffs and quotas differ in that tariffs work like a tax and therefore impose deadweight losses,whereas quotas do not impose deadweight losses. D) Free trade benefits a country both when it exports and when it imports.

When a country allows international trade and becomes an exporter of a good, A) domestic producers of the good become better off. B) domestic consumers of the good become worse off. C) the gains of the winners exceed the losses of the losers. D) All of the above are correct.

Suppose Scotland goes from being an isolated country to being an exporter of wool.As a result, A) consumer surplus of Scottish consumers of wool increases. B) producer surplus of Scottish producers of wool increases. C) total surplus of Scottish wool consumers and producers remains constant. D) it is reasonable to infer that other countries have a comparative advantage over Scotland in wool production.

When a country allows international trade and becomes an importer of a good, A) domestic producers of the good become better off. B) domestic consumers of the good become worse off. C) the gains of the winners exceed the losses of the losers. D) All of the above are correct.

Assume,for France,that the domestic price of tea without international trade is higher than the world price of tea.This suggests that A) other countries have a comparative advantage over France in producing tea. B) France has an absolute advantage over other countries in producing tea. C) France will export tea if international trade is allowed. D) French tea buyers will become worse off if international trade is allowed.

Suppose a country begins to allow international trade in steel.Which of the following outcomes will be observed regardless of whether the country finds itself importing steel or exporting steel? A) The sum of consumer surplus and producer surplus for domestic traders of steel increases. B) The quantity of steel demanded by domestic consumers increases. C) Domestic producers of steel receive a higher price for steel. D) The losses of the losers exceed the gains of the winners.

After a country goes from disallowing trade in coffee with other countries to allowing trade in coffee with other countries, A) the domestic price of coffee will be greater than the world price of coffee. B) the domestic price of coffee will be lower than the world price of coffee. C) the domestic price of coffee will equal the world price of coffee. D) The world price of coffee does not matter;the domestic price of coffee prevails.

Within a country,the domestic price of a product will equal the world price if A) trade restrictions are imposed on the product. B) the country allows free trade. C) the country chooses to import,but not export,the product. D) the country chooses to export,but not import,the product.

The world price of a simple electronic calculator is $5.00.Before Singapore allowed trade in calculators,the price of a calculator there was $4.00.Once Singapore began allowing trade in calculators with other countries,Singapore began A) importing calculators and the price of a calculator in Singapore increased to $5.00. B) importing calculators and the price of a calculator in Singapore remained at $4.00. C) exporting calculators and the price of a calculator in Singapore increased to $5.00. D) exporting calculators and the price of a calculator in Singapore remained at $4.00.

The world price of a pound of T-bone steak is $9.00.Before Latvia allowed trade in beef,the price of a pound of T-bone steak there was $7.50.Once Latvia began allowing trade in beef with other countries,Latvia began A) exporting T-bone steak and the price per pound in Latvia remained at $7.50. B) exporting T-bone steak and the price per pound in Latvia increased to $9.00. C) importing T-bone steak and the price per pound in Latvia remained at $7.50. D) importing T-bone steak and the price per pound in Latvia increased to $9.00.

Suppose a country abandons a no-trade policy in favor of a free-trade policy.If,as a result,the domestic price of beans increases to equal the world price of beans,then A) that country becomes an exporter of beans. B) that country has a comparative advantage in producing beans. C) at the world price,the quantity of beans supplied in that country exceeds the quantity of beans demanded in that country. D) All of the above are correct.

Suppose a country abandons a no-trade policy in favor of a free-trade policy.If,as a result,the domestic price of pistachios decreases to equal the world price of pistachios,then A) that country becomes an importer of pistachios. B) that country has a comparative advantage in producing pistachios. C) at the world price,the quantity of pistachios supplied in that country exceeds the quantity of pistachios demanded in that country. D) All of the above are correct.

Figure 9-2 -Refer to Figure 9-2.Without trade,consumer surplus is A) $210. B) $245. C) $455. D) $490.

Figure 9-2 -Refer to Figure 9-2.Without trade,producer surplus is A) $210. B) $245. C) $455. D) $490.

Figure 9-2 -Refer to Figure 9-2.With free trade,this country will A) import 40 baskets. B) import 70 baskets. C) export 35 baskets. D) export 65 baskets.

Figure 9-2 -Refer to Figure 9-2.If this country chooses to trade,the price of baskets in this country will be A) $10 and 40 baskets will be sold domestically. B) $10 and 105 baskets will be sold domestically. C) $7 and 70 baskets will be sold domestically. D) $7 and 40 baskets will be sold domestically.

Figure 9-2 -Refer to Figure 9-2.With free trade,consumer surplus is A) $45. B) $80. C) $210. D) $245.

Figure 9-2 -Refer to Figure 9-2.With free trade,producer surplus is A) $80.00. B) $210.00. C) $245.50. D) $472.50.

Figure 9-2 -Refer to Figure 9-2.As a result of trade,total surplus increases by A) $80. B) $97.50. C) $162.50. D) $495.50.

Figure 9-2 -Refer to Figure 9-2.This country A) has a comparative advantage in baskets. B) should export baskets. C) is a price taker in the world economy. D) All of the above are correct.

Figure 9-2 -Refer to Figure 9-2.The world price for baskets represents A) the demand for baskets from the rest of the world. B) the supply of baskets from the rest of the world. C) the level of inefficiency in the domestic market caused by trade. D) the gap between domestic quantity demanded and domestic quantity supplied and the resulting shortage.

Figure 9-2 -Refer to Figure 9-2.At the world price and with free trade, A) the domestic quantity of baskets demanded is greater than the domestic quantity of baskets supplied. B) the basket market is in equilibrium. C) the domestic demand for baskets is perfectly inelastic. D) both domestic producers of baskets and domestic consumers of baskets are better off than they were without free trade.

Figure 9-3.The domestic country is China. -Refer to Figure 9-3.With no international trade, A) the equilibrium price is $12 and the equilibrium quantity is 300. B) the equilibrium price is $16 and the equilibrium quantity is 200. C) the equilibrium price is $16 and the equilibrium quantity is 300. D) the equilibrium price is $16 and the equilibrium quantity is 450.

Figure 9-3.The domestic country is China. -Refer to Figure 9-3.If China were to abandon a no-trade policy in favor of a free-trade policy, A) Chinese producers of pencil sharpeners would become worse off. B) Chinese consumers of pencil sharpeners would become better off. C) total surplus in the Chinese economy would increase. D) All of the above are correct.

Figure 9-3.The domestic country is China. -Refer to Figure 9-3.With trade,China will A) import 100 pencil sharpeners. B) import 250 pencil sharpeners. C) export 150 pencil sharpeners. D) export 250 pencil sharpeners.

Figure 9-3.The domestic country is China. -Refer to Figure 9-3.With trade,producer surplus in China is A) $800. B) $1,200. C) $1,800. D) $2,700.

Figure 9-3.The domestic country is China. -Refer to Figure 9-3.Relative to a no-trade situation,which of the following comes with trade? A) Consumer surplus increases by $1,800 and producer surplus increases by $1,600. B) Consumer surplus decreases by $1,000 and producer surplus increases by $1,500. C) Consumer surplus decreases by $1,000 and producer surplus increases by $1,750. D) Total surplus increases by $400.

Figure 9-3.The domestic country is China. -Refer to Figure 9-3.The increase in total surplus in China when trade is allowed is A) $400. B) $500. C) $600. D) $750.

Figure 9-4.The domestic country is Jamaica. -Refer to Figure 9-4.With trade,Jamaica A) imports 150 calculators. B) imports 250 calculators. C) exports 100 calculators. D) exports 250 calculators.

Figure 9-4.The domestic country is Jamaica. -Refer to Figure 9-4.Consumer surplus in Jamaica without trade is A) $375. B) $2,000. C) $2,250. D) $8,700.

Figure 9-4.The domestic country is Jamaica. -Refer to Figure 9-4.The change in total surplus in Jamaica because of trade is A) $625,and this is an increase in total surplus. B) $750,and this is an increase in total surplus. C) $625,and this is a decrease in total surplus. D) $750,and this is a decrease in total surplus.

Figure 9-4.The domestic country is Jamaica. -Refer to Figure 9-4.Which of the following statements is accurate? A) Consumer surplus with trade is $3,200. B) Producer surplus with trade is $375. C) The gains from trade amount to $800. D) The gains from trade are represented on the graph by the area bounded by the points (0,$12),(300,$12),(300,$7)and (0,$7).

Scenario 9-1 The before-trade domestic price of tomatoes in the United States is $500 per ton.The world price of tomatoes is $600 per ton.The U.S.is a price-taker in the market for tomatoes. -Refer to Scenario 9-1.If trade in tomatoes is allowed,the United States A) will become an importer of tomatoes. B) will become an exporter of tomatoes. C) may become either an importer or an exporter of tomatoes,but this cannot be determined. D) will experience increases in both consumer surplus and producer surplus.

Scenario 9-1 The before-trade domestic price of tomatoes in the United States is $500 per ton.The world price of tomatoes is $600 per ton.The U.S.is a price-taker in the market for tomatoes. -Refer to Scenario 9-1.If trade in tomatoes is allowed,the price of tomatoes in the United States A) will increase,and this will cause consumer surplus to decrease. B) will decrease,and this will cause consumer surplus to increase. C) will be unaffected,and consumer surplus will be unaffected as well. D) could increase or decrease or be unaffected;this cannot be determined.

Scenario 9-1 The before-trade domestic price of tomatoes in the United States is $500 per ton.The world price of tomatoes is $600 per ton.The U.S.is a price-taker in the market for tomatoes. -Refer to Scenario 9-1.If trade in tomatoes is allowed,the price of tomatoes in the United States A) will be greater than the world price. B) will be equal to the world price. C) will be less than the world price. D) could be greater than,equal to,or less than the world price;this cannot be determined.

Scenario 9-1 The before-trade domestic price of tomatoes in the United States is $500 per ton.The world price of tomatoes is $600 per ton.The U.S.is a price-taker in the market for tomatoes. -Refer to Scenario 9-1.If trade in tomatoes is allowed,U.S.producers of tomatoes A) will be better off. B) will be worse off. C) will be unaffected. D) will experience a decrease in their collective producer surplus.

Scenario 9-1 The before-trade domestic price of tomatoes in the United States is $500 per ton.The world price of tomatoes is $600 per ton.The U.S.is a price-taker in the market for tomatoes. -Refer to Scenario 9-1.If trade in tomatoes is allowed,the A) price paid by American consumers of tomatoes is unchanged relative to the no-trade situation. B) total well-being of American producers of tomatoes is diminished relative to the no-trade situation. C) total well-being of American consumers of tomatoes is enhanced relative to the no-trade situation. D) total well-being of the United States is enhanced relative to the no-trade situation.

Figure 9-5 -Refer to Figure 9-5.The horizontal line at the world price of wagons represents the A) demand for wagons from the rest of the world. B) supply of wagons from the rest of the world. C) level of inefficiency in the domestic market caused by trade. D) surplus in the domestic wagon market.

Figure 9-5 -Refer to Figure 9-5.With trade,this country A) exports 20 wagons. B) exports 50 wagons. C) imports 30 wagons. D) imports 50 wagons.

Figure 9-5 -Refer to Figure 9-5.Without trade,consumer surplus amounts to A) $210.50. B) $245.50. C) $367.50. D) $607.50.

Figure 9-5 -Refer to Figure 9-5.Without trade,producer surplus amounts to A) $210. B) $245. C) $450. D) $455.

Figure 9-5 -Refer to Figure 9-5.Without trade,total surplus amounts to A) $122.50. B) $245. C) $367.50. D) $612.50.

Figure 9-5 -Refer to Figure 9-5.With trade,the price of wagons in this country is A) $8,with 70 wagons produced in this country,20 of which are exported. B) $8,with 90 wagons produced in this country,50 of which are exported. C) $5,with 40 wagons produced in this country and another 30 wagons imported. D) $5,with 40 wagons produced in this country and another 50 wagons imported.

Figure 9-5 -Refer to Figure 9-5.With trade,consumer surplus is A) $245. B) $362.50. C) $367.50. D) $607.50.

Figure 9-5 -Refer to Figure 9-5.With trade,producer surplus is A) $80. B) $150. C) $210. D) $245.

Figure 9-5 -Refer to Figure 9-5.With trade,total surplus is A) $245. B) $367.50. C) $607.50. D) $687.50.

Figure 9-5 -Refer to Figure 9-5.Total surplus with trade exceeds total surplus without trade by A) $60. B) $75. C) $135. D) $210.

Figure 9-5 -Refer to Figure 9-5.The increase in total surplus resulting from trade is A) $60,since producer surplus increases by $180 and consumer surplus falls by $240. B) $60,since consumer surplus increases by $180 and producer surplus falls by $240. C) $75,since consumer surplus increases by $240 and producer surplus falls by $165. D) $75,since consumer surplus increases by $300 and producer surplus falls by $225.

Figure 9-5 -Refer to Figure 9-5.If this country allows free trade in wagons, A) consumers will gain and producers will lose. B) consumers will lose and producers will gain. C) both consumers and producers will gain. D) both consumers and producers will lose.

Figure 9-5 -Refer to Figure 9-5.If this country allows free trade in wagons, A) consumers will gain more than producers will lose. B) producers will gain more than consumers will lose. C) producers and consumers will both gain equally. D) producers and consumers will both lose equally.

Figure 9-5 -Refer to Figure 9-5.Bearing in mind that this country is "small," which of the following events conceivably could cause the country to switch from being an importer of wagons to an exporter of wagons? A) Incomes of domestic citizens increase,and wagons are a normal good. B) Within this country,the price of a substitute for wagons decreases. C) Within this country,the price of a complement to wagons decreases. D) Wages increase for domestic workers who produce wagons.

Figure 9-5 -Refer to Figure 9-5.Bearing in mind that this country is "small," what would happen if there were a decrease in the price of horses within this country,given that wagons and horses are complements? A) The quantity of wagons that this country imports would increase. B) The quantity of wagons that this country imports would decrease,but the country would still be an importer of wagons. C) This country would switch from being an importer of wagons to an exporter of wagons. D) The domestic price without trade would move closer to the world price.

Figure 9-6 -Refer to Figure 9-6.Without trade,the equilibrium price of carnations is A) $8 and the equilibrium quantity is 300. B) $6 and the equilibrium quantity is 200. C) $6 and the equilibrium quantity is 400. D) $4 and the equilibrium quantity is 500.

Figure 9-6 -Refer to Figure 9-6.With trade and without a tariff, A) the domestic price is equal to the world price. B) carnations are sold at $8 in this market. C) there is a shortage of 400 carnations in this market. D) this country imports 200 carnations.

Figure 9-6 -Refer to Figure 9-6.Before the tariff is imposed,this country A) imports 200 carnations. B) imports 400 carnations. C) exports 200 carnations. D) exports 400 carnations.

Figure 9-6 -Refer to Figure 9-6.The size of the tariff on carnations is A) $8 per dozen. B) $6 per dozen. C) $4 per dozen. D) $2 per dozen.

Figure 9-6 -Refer to Figure 9-6.The imposition of a tariff on carnations A) increases the number of carnations imported by 100. B) increases the number of carnations imported by 200. C) decreases the number of carnations imported by 200. D) decreases the number of carnations imported by 400.

Figure 9-6 -Refer to Figure 9-6.The amount of revenue collected by the government from the tariff is A) $200. B) $400. C) $500. D) $600.

Figure 9-6 -Refer to Figure 9-6.When a tariff is imposed in the market,domestic producers A) gain by $100. B) gain by $200. C) gain by $300. D) lose by $100.

Figure 9-6 -Refer to Figure 9-6.The amount of deadweight loss caused by the tariff equals A) $100. B) $200. C) $400. D) $500.

Figure 9-6 -Refer to Figure 9-6.When the tariff is imposed,domestic consumers A) lose by $500. B) lose by $900. C) gain by $500. D) gain by $900.

Figure 9-6 -The before-trade price of fish in Germany is $8.00 per pound.The world price of fish is $6.00 per pound.Germany is a price-taker in the fish market.If Germany allows trade in fish,then Germany will become an A) importer of fish and the price of fish in Germany will be $6.00. B) importer of fish and the price of fish in Germany will be $8.00. C) exporter of fish and the price of fish in Germany will be $6.00. D) exporter of fish and the price of fish in Germany will be $8.00.

Figure 9-6 -The before-trade price of fish in Denmark is $10.00 per pound.The world price of fish is $6.00 per pound.Denmark is a price-taker in the fish market.If Denmark begins to allow trade in fish,its consumers of fish will become A) better off,its producers of fish will become better off,and on balance the citizens of Denmark will become better off. B) worse off,its producers of fish will become better off,and on balance the citizens of Denmark will become worse off. C) worse off,its producers of fish will become better off,and on balance the citizens of Denmark will become worse off. D) better off,its producers of fish will become worse off,and on balance the citizens of Denmark will become better off.

Figure 9-7.The figure applies to the nation of Wales and the good is cheese. -Refer to Figure 9-7.The equilibrium price and the equilibrium quantity of cheese in Wales before trade are A) P₁ and Q_2. B) P₁ and Q₁. C) P₀ and Q₀. D) P₀ and Q₁.

Figure 9-7.The figure applies to the nation of Wales and the good is cheese. -Refer to Figure 9-7.With trade,the Welsh price of cheese and the Welsh quantity of cheese demanded are A) P₁ and Q₂. B) P₁ and Q₁. C) P₀ and Q₀. D) P₃ and Q₁.

Figure 9-7.The figure applies to the nation of Wales and the good is cheese. -Refer to Figure 9-7.With trade,Wales A) imports Q₂ - Q₁ units of cheese. B) exports Q₂ - Q₁ units of cheese. C) imports Q₂ - Q₀ units of cheese. D) exports Q₂ - Q₀ units of cheese.

Figure 9-7.The figure applies to the nation of Wales and the good is cheese. -Refer to Figure 9-7.Which of the following is a valid equation for Welsh consumer surplus with trade? A) Consumer surplus with trade = (1/2)(Q₀)(P₁ - P₀). B) Consumer surplus with trade = (1/2)(Q₀)(P₃ - P₀). C) Consumer surplus with trade = (1/2)(Q₁)(P₃ - P₁). D) None of the above is correct.

Figure 9-7.The figure applies to the nation of Wales and the good is cheese. -Refer to Figure 9-7.Which of the following is a valid equation for Welsh producer surplus with trade? A) Producer surplus with trade = (1/2)P₀Q_0. B) Producer surplus with trade = (1/2)P₁Q_1. C) Producer surplus with trade = (1/2)P₁Q_2. D) None of the above is correct.

Figure 9-7.The figure applies to the nation of Wales and the good is cheese. -Refer to Figure 9-7.Which of the following is a valid equation for the gains from trade? A) Gains from trade = (1/2)(P₁ - P₀)(Q₂ - Q₁). B) Gains from trade = (1/2)(P₁ - P₀)(Q₂ - Q₀) C) Gains from trade = (1/2)(P₁ - P₀)(Q₁ + Q₂). D) Gains from trade = (1/2)(Q₁)(P₃ - P₁).

Figure 9-8.On the diagram below,Q represents the quantity of cars and P represents the price of cars. -Refer to Figure 9-8.The price corresponding to the horizontal dotted line on the graph represents the price of cars A) after trade is allowed. B) before trade is allowed. C) that maximizes total surplus when trade is allowed. D) that minimizes the well-being of domestic car producers when trade is allowed.

Figure 9-8.On the diagram below,Q represents the quantity of cars and P represents the price of cars. -Refer to Figure 9-8.The country for which the figure is drawn A) has a comparative advantage relative to other countries in the production of cars and it will export cars. B) has a comparative advantage relative to other countries in the production of cars and it will import cars. C) has a comparative disadvantage relative to other countries in the production of cars and it will export cars. D) has a comparative disadvantage relative to other countries in the production of cars and it will import cars.

Figure 9-8.On the diagram below,Q represents the quantity of cars and P represents the price of cars. -Refer to Figure 9-8.When the country for which the figure is drawn allows international trade in cars, A) consumer surplus increases by the area B. B) producer surplus decreases by the area B + D. C) total surplus increases by the area D. D) All of the above are correct.

Figure 9-8.On the diagram below,Q represents the quantity of cars and P represents the price of cars. -Refer to Figure 9-8.In the country for which the figure is drawn,total surplus with international trade in cars A) is represented by the area A + B + C. B) is represented by the area A + B + D. C) is smaller than producer surplus without international trade in cars. D) is larger than total surplus without international trade in cars.

Figure 9-9 -Refer to Figure 9-9.Consumer surplus in this market before trade is A) A. B) A + B. C) A + B + D. D) C.

Figure 9-9 -Refer to Figure 9-9.Consumer surplus in this market after trade is A) A. B) A + B. C) A + B + D. D) C.

Figure 9-9 -Refer to Figure 9-9.Producer surplus in this market before trade is A) A. B) A + B. C) B + C + D. D) C.

Figure 9-9 -Refer to Figure 9-9.Producer surplus in this market after trade is A) A. B) A + B. C) B + C + D. D) C.

Figure 9-9 -Refer to Figure 9-9.Total surplus in this market before trade is A) A + B. B) A + B + C. C) A + B + C + D. D) B + C + D.

Figure 9-9 -Refer to Figure 9-9.Total surplus in this market after trade is A) A + B. B) A + B + C. C) A + B + C + D. D) B + C + D.

Figure 9-9 -Refer to Figure 9-9.The change in total surplus in this market because of trade is A) D,and this area represents a loss of total surplus because of trade. B) D,and this area represents a gain in total surplus because of trade. C) B + D,and this area represents a loss of total surplus because of trade. D) B + D,and this area represents a gain in total surplus because of trade.

Figure 9-10.The figure applies to the nation of Australia and the good is cameras. -Refer to Figure 9-10.The price and quantity of cameras in Australia before trade is A) P₀ and Q₀. B) P₁ and Q₁. C) P₂ and Q₂. D) P₁ and Q₀.

Figure 9-10.The figure applies to the nation of Australia and the good is cameras. -Refer to Figure 9-10.With trade,the equilibrium price of cameras and the equilibrium quantity of cameras demanded in Australia are A) P₁ and Q₁. B) P₁ and Q₂. C) P₂ and Q₂. D) P₀ and Q₀.

Figure 9-10.The figure applies to the nation of Australia and the good is cameras. -Refer to Figure 9-10.When trade takes place,the quantity Q₂ - Q₁ is A) the number of cameras bought and sold in Australia. B) the number of cameras produced in Australia. C) the number of cameras exported by Australia. D) the number of cameras imported by Australia.

Figure 9-10.The figure applies to the nation of Australia and the good is cameras. -Refer to Figure 9-10.Australia's gains from trade are represented by the area that is bounded by the points A) (0,P₀),(Q₀,P₀),(Q₂,P₁),and (0,P₁). B) (0,P₁),(0,P₂),(Q₀,P₀),and (Q₁,P₁). C) (Q₀,P₀),(Q₂,P₁),and (Q₁,P₁). D) (0,P₀),(0,P₂),and (Q₀,P₀).

Figure 9-10.The figure applies to the nation of Australia and the good is cameras. -Refer to Figure 9-10.The area bounded by the points (Q₀,P₀),(Q₂,P₁),and (Q₁,P₁)represents A) Australia's gains from trade. B) the amount by which Australia's gain in consumer surplus exceeds its loss in producer surplus due to trade. C) Australia's gain in total surplus due to trade. D) All of the above are correct.

Figure 9-10.The figure applies to the nation of Australia and the good is cameras. -Refer to Figure 9-10.The area bounded by the points (Q₀,P₀),(Q₂,P₁),and (Q₁,P₁)represents A) Australia's gains from trade. B) the amount by which Australia's gain in producer surplus exceeds its loss in consumer surplus due to trade. C) Australia's loss in total surplus due to trade. D) All of the above are correct.

Figure 9-11 -Refer to Figure 9-11.Consumer surplus in this market before trade is A) A. B) B + C. C) A + B + D. D) C.

Figure 9-11 -Refer to Figure 9-11.Consumer surplus in this market after trade is A) A. B) C + B. C) A + B + D. D) B + C + D.

Figure 9-11 -Refer to Figure 9-11.Producer surplus in this market before trade is A) C. B) B + C. C) A + B + D. D) B + C + D.

Figure 9-11 -Refer to Figure 9-11.Producer surplus in this market after trade is A) C. B) C + B. C) A + B + D. D) B + C + D.

Figure 9-11 -Refer to Figure 9-11.Producer surplus plus consumer surplus in this market before trade is A) A + B. B) A + B + C. C) A + B + C + D. D) B + C + D.

Figure 9-11 -Refer to Figure 9-11.Producer surplus plus consumer surplus in this market after trade is A) A + B. B) A + B + C. C) B + C + D. D) A + B + C + D.

Figure 9-11 -Refer to Figure 9-11.The change in total surplus in this market because of trade is A) A,and this area represents a loss of total surplus. B) B,and this area represents a gain in total surplus. C) C,and this area represents a loss of total surplus. D) D,and this area represents a gain in total surplus.

Figure 9-12 -Refer to Figure 9-12.Equilibrium price and equilibrium quantity without trade are A) $18 and 400. B) $18 and 800. C) $14 and 400. D) $14 and 600.

Figure 9-12 -Refer to Figure 9-12.With trade,the domestic price and domestic quantity demanded are A) $18 and 400. B) $18 and 800. C) $14 and 400. D) $14 and 600.

Figure 9-12 -Refer to Figure 9-12.With trade,domestic production and domestic consumption,respectively,are A) 600 and 400. B) 800 and 400. C) 400 and 600. D) 400 and 800.

Figure 9-12 -Refer to Figure 9-12.Consumer surplus before trade is A) $1,600. B) $2,400. C) $3,200. D) $3,600.

Figure 9-12 -Refer to Figure 9-12.Consumer surplus after trade is A) $1,600. B) $2,400. C) $3,200. D) $3,600.

Figure 9-12 -Refer to Figure 9-12.Producer surplus before trade is A) $3,600. B) $4,400. C) $5,200. D) $6,600.

Figure 9-12 -Refer to Figure 9-12.Producer surplus after trade is A) $4,800. B) $5,600. C) $6,400. D) $7,000.

Figure 9-12 -Refer to Figure 9-12.With trade allowed,this country A) exports 200 units of the good. B) exports 400 units of the good. C) imports 200 units of the good. D) exports 800 units of the good.

Figure 9-13 -Refer to Figure 9-13.The price and domestic quantity demanded after trade are A) $8 and 300. B) $8 and 900. C) $14 and 900. D) $14 and 600.

Figure 9-13 -Refer to Figure 9-13.With trade,domestic production and domestic consumption,respectively,are A) 600 and 600. B) 600 and 300. C) 300 and 900. D) 600 and 900.

Figure 9-13 -Refer to Figure 9-13.Consumer surplus before trade is A) $1,600. B) $,2400. C) $3,200. D) $3,600.

Figure 9-13 -Refer to Figure 9-13.Consumer surplus after trade is A) $3,600. B) $5,400. C) $7,200. D) $8,100.

Figure 9-13 -Refer to Figure 9-13.Producer surplus before trade is A) $3,600. B) $4,400. C) $5,200. D) $6,600.

Figure 9-13 -Refer to Figure 9-13.With trade,producer surplus is A) $900. B) $1,100. C) $1,500. D) $2,000.

Figure 9-13 -Refer to Figure 9-13.With trade,the country A) exports 200 units of the good. B) exports 400 units of the good. C) imports 400 units of the good. D) imports 600 units of the good.

Figure 9-14.On the diagram below,Q represents the quantity of computers and P represents the price of computers. -Refer to Figure 9-14.When the country for which the figure is drawn allows international trade in computers, A) consumer surplus for domestic computer consumers decreases. B) the demand for computers by domestic computer consumers decreases. C) the losses of the domestic losers outweigh the gains of the domestic winners. D) domestic computer producers sell fewer computers.

Figure 9-14.On the diagram below,Q represents the quantity of computers and P represents the price of computers. -Refer to Figure 9-14.When the country for which the figure is drawn allows international trade in computers, A) consumer surplus changes from the area A + B + D to the area A. B) producer surplus changes from the area C to the area B + C + D. C) total surplus decreases by the area D. D) All of the above are correct.

Figure 9-14.On the diagram below,Q represents the quantity of computers and P represents the price of computers. -Refer to Figure 9-14.The country for which the figure is drawn A) has a comparative advantage relative to other countries in the production of computers and it will export computers. B) has a comparative advantage relative to other countries in the production of computers and it will import computers. C) has a comparative disadvantage relative to other countries in the production of computers and it will export computers. D) has a comparative disadvantage relative to other countries in the production of computers and it will import computers.

Figure 9-14.On the diagram below,Q represents the quantity of computers and P represents the price of computers. -Refer to Figure 9-14.A result of this country allowing international trade in computers is as follows: A) The well-being of domestic computer producers is now higher in that they now sell more computers at a higher price per computer. B) The effect on the well-being of domestic computer consumers is unclear in that they now buy more computers,but at a higher price per computer. C) The effect on the well-being of the country is unclear in that domestic producer surplus increases,while the effect on domestic consumer surplus is unclear. D) All of the above are correct.

A tariff on a product makes A) domestic sellers better off and domestic buyers worse off. B) domestic sellers worse off and domestic buyers worse off. C) domestic sellers better off and domestic buyers better off. D) domestic sellers worse off and domestic buyers better off.

A tariff on a product A) is a direct quantitative restriction on the amount of a good that can be imported. B) increases the domestic quantity supplied. C) increases domestic consumer surplus. D) All of the above are correct.

A tariff on a product A) enhances the economic well-being of the domestic economy. B) increases the domestic quantity supplied. C) increases the domestic quantity demanded. D) results in an increase in producer surplus that is greater than the resulting decrease in consumer surplus.

If the United States imposes a tariff on automobiles,then A) total surplus in the American automobile market decreases. B) producer surplus in the American automobile market increases. C) U.S.imports of foreign automobiles decrease. D) All of the above are correct.

When a country that imports a particular good imposes a tariff on that good, A) consumer surplus increases and total surplus increases in the market for that good. B) consumer surplus increases and total surplus decreases in the market for that good. C) consumer surplus decreases and total surplus increases in the market for that good. D) consumer surplus decreases and total surplus decreases in the market for that good.

When a country that imports a particular good imposes a tariff on that good, A) producer surplus increases and total surplus increases in the market for that good. B) producer surplus increases and total surplus decreases in the market for that good. C) producer surplus decreases and total surplus increases in the market for that good. D) producer surplus decreases and total surplus decreases in the market for that good.

When a country that imports a particular good imposes an import quota on that good, A) consumer surplus increases and total surplus increases in the market for that good. B) consumer surplus increases and total surplus decreases in the market for that good. C) consumer surplus decreases and total surplus increases in the market for that good. D) consumer surplus decreases and total surplus decreases in the market for that good.

When a country that imports a particular good imposes an import quota on that good, A) producer surplus increases and total surplus increases in the market for that good. B) producer surplus increases and total surplus decreases in the market for that good. C) producer surplus decreases and total surplus increases in the market for that good. D) producer surplus decreases and total surplus decreases in the market for that good.

A tariff is a tax placed on A) an exported good and it lowers the domestic price of the good below the world price. B) an exported good and it ensures that the domestic price of the good stays the same as the world price. C) an imported good and it lowers the domestic price of the good below the world price. D) an imported good and it raises the domestic price of the good above the world price.

A tariff A) lowers the domestic price of the exported good below the world price. B) keeps the domestic price of the exported good the same as the world price. C) raises the domestic price of the imported good above the world price. D) lowers the domestic price of the imported good below the world price.

When a country moves away from a free trade position and imposes a tariff on imports,it causes A) a decrease in total surplus in the market. B) a decrease in producer surplus in the market. C) an increase in consumer surplus in the market. D) a decrease in revenue to the government.

If the demand curve and the supply curve for a good are straight lines,then the deadweight loss that results from a tariff is represented on the supply-and-demand graph by A) the area of one triangle. B) the area of one rectangle. C) the combined areas of two different triangles. D) the combined areas of two different rectangles.

Suppose Mexico imposes a tariff on lumber.For the tariff to have any effect,it must be the case that A) Mexico is an exporter of lumber. B) the domestic quantity of lumber supplied exceeds the domestic quantity of lumber demanded at the world price without the tariff. C) the world price without the tariff is less than the price of lumber without trade. D) the world price without the tariff is greater than the price of lumber without trade.

Spain is an importer of computer chips,taking the world price of $12 per chip as given.Suppose Spain imposes a $5 tariff on chips.As a result, A) Spanish consumers of chips and Spanish producers of chips both gain. B) Spanish consumers of chips gain and Spanish producers of chips lose. C) Spanish consumers of chips lose and Spanish producers of chips gain. D) Spanish consumers of chips and Spanish producers of chips both lose.

Denmark is an importer of computer chips,taking the world price of $12 per chip as given.Suppose Denmark imposes a $5 tariff on chips.Which of the following outcomes is possible? A) More Danish-produced chips are sold in Denmark. B) More foreign-produced chips are sold in Denmark. C) Danish consumers of chips become better off. D) Total surplus in the Danish chip market increases.

Chile is an importer of computer chips,taking the world price of $12 per chip as given.Suppose Chile imposes a $7 tariff on chips.Which of the following outcomes is possible? A) The price of chips in Chile increases to $19;the quantity of Chilean-produced chips decreases;and the quantity of chips imported by Chile decreases. B) The price of chips in Chile increases to $16;the quantity of Chilean-produced chips increases;and the quantity of chips imported by Chile decreases. C) The price of chips in Chile increases to $19;the quantity of Chilean-produced chips increases;and the quantity of chips imported by Chile decreases. D) The price of chips in Chile increases to $16;the quantity of Chilean-produced chips increases;and the quantity of chips imported by Chile does not change.

Honduras is an importer of goose-down pillows.The world price of these pillows is $50.Honduras imposes a $7 tariff on pillows.Honduras is a price-taker in the pillow market.As a result of the tariff,the price of goose-down pillows in Honduras A) remains at $50 and the quantity of goose-down pillows purchased in Honduras decreases. B) increases to $57 and the quantity of goose-down pillows purchased in Honduras decreases. C) increases to a new price between $50 and $57 and the quantity of goose-down pillows purchased in Honduras decreases. D) increases to a new price above $57 and the quantity of goose-down pillows purchased in Honduras remains the same.

Turkey is an importer of wheat.The world price of a bushel of wheat is $7.Turkey imposes a $3-per-bushel tariff on wheat.Turkey is a price-taker in the wheat market.As a result of the tariff, A) Turkish consumers of wheat become worse off and Turkish producers of wheat become worse off. B) Turkish consumers of wheat become worse off and Turkish producers of wheat become better off. C) Turkish consumers of wheat become better off and Turkish producers of wheat become worse off. D) Turkish consumers of wheat become better off and Turkish producers of wheat become better off.

When the nation of Brownland first permitted trade with other nations,domestic producers of wheat experienced an increase in producer surplus of $4 million and total surplus in Brownland's wheat market increased by $1 million.We can conclude that A) Brownland became an exporter of wheat. B) consumer surplus in Brownland increased by $3 million. C) the opening of trade caused the domestic supply curve for wheat in Brownland to shift to the left. D) this example is inconsistent with the economic theory of international trade.

When the nation of Mooseland first permitted trade with other nations,domestic producers of sugar experienced a decrease in producer surplus of $5 million and total surplus in Mooseland's sugar market increased by $2 million.We can conclude that A) Mooseland became an exporter of sugar. B) the overall economic well-being of participants in the sugar market in Mooseland fell because of trade. C) consumer surplus in Mooseland increased by $7 million. D) the opening of trade caused the domestic demand curve for sugar in Mooseland to shift to the right.

Figure 9-15 -Refer to Figure 9-15.With trade and without a tariff,the price and domestic quantity demanded are A) P₁ and Q₁. B) P₁ and Q₄. C) P₂ and Q₂. D) P₂ and Q₃.

Figure 9-15 -Refer to Figure 9-15.With the tariff,the domestic price and domestic quantity demanded are A) P₁ and Q₁. B) P₁ and Q₄. C) P₂ and Q₂. D) P₂ and Q₃.

Figure 9-15 -Refer to Figure 9-15.With the tariff,the quantity of saddles imported is A) Q₃ - Q₁. B) Q₃ - Q₂. C) Q₄ - Q₁. D) Q₄ - Q₂.

Figure 9-15 -Refer to Figure 9-15.A result of the tariff is that,relative to the free-trade situation,the quantity of saddles imported decreases by A) Q₂ - Q₁. B) Q₃ - Q₂. C) Q₄ - Q₃. D) Q₄ - Q₃ + Q₂ - Q₁.

Figure 9-15 -Refer to Figure 9-15.Consumer surplus with trade and without a tariff is A) A. B) A + B. C) A + C + G. D) A + B + C + D + E + F.

Figure 9-15 -Refer to Figure 9-15.Producer surplus with trade and without a tariff is A) G. B) C + G. C) A + C + G. D) A + B + C + G.

Figure 9-15 -Refer to Figure 9-15.Consumer surplus with the tariff is A) A. B) A + B. C) A + C + G. D) A + B + C + D +E + F.

Figure 9-15 -Refer to Figure 9-15.Producer surplus with the tariff is A) G. B) C + G. C) A + C + G. D) A + B + C + G.

Figure 9-15 -Refer to Figure 9-15.The amount of government revenue created by the tariff is A) B. B) E. C) D + F. D) B + D + E + F.

Figure 9-15 -Refer to Figure 9-15.As a result of the tariff,there is a deadweight loss that amounts to A) B. B) E. C) D + F. D) B + D + E + F.

Figure 9-15 -Refer to Figure 9-15.For the saddle market,area B represents A) government's revenue from the tariff. B) the deadweight loss of the tariff. C) the increase in producer surplus,relative to the free-trade situation,as a result of the tariff. D) None of the above is correct.

Figure 9-15 -Refer to Figure 9-15.For the saddle market,area E represents A) government's revenue from the tariff. B) producer surplus after the tariff becomes effective. C) the decrease in consumer surplus,relative to the free-trade situation,as a result of the tariff. D) the decrease in total surplus,relative to the free-trade situation,as a result of the tariff.

Figure 9-16.The figure below illustrates a tariff.On the graph,Q represents quantity and P represents price. -Refer to Figure 9-16.Government revenue raised by the tariff is represented by the area A) E. B) B + E. C) D + E + F. D) B + D + E + F.

Figure 9-16.The figure below illustrates a tariff.On the graph,Q represents quantity and P represents price. -Refer to Figure 9-16.The tariff A) decreases producer surplus by the area C and decreases consumer surplus by the area C + D + E + F. B) decreases producer surplus by the area C + D and decreases consumer surplus by the area D + E + F. C) increases producer surplus by the area C and decreases consumer surplus by the area C + D + E + F. D) increases producer surplus by the area B + C and decrease consumer surplus by the area D + E + F.

Figure 9-16.The figure below illustrates a tariff.On the graph,Q represents quantity and P represents price. -Refer to Figure 9-16.The tariff A) decreases producer surplus by the area C,decreases consumer surplus by the area C + D + E,and decreases total surplus by the area D + F. B) increases producer surplus by the area C,decreases consumer surplus by the area C + D + E + F,and decreases total surplus by the area D + F.. C) creates government revenue represented by the area B + E and decreases total surplus by the area D + E + F. D) increases producer surplus by the area C + G and creates government revenue represented by the area D + E + F.

Figure 9-16.The figure below illustrates a tariff.On the graph,Q represents quantity and P represents price. -Refer to Figure 9-16.The deadweight loss created by the tariff is represented by the area A) B. B) D + F. C) D + E + F. D) B + D + E + F.

Figure 9-16.The figure below illustrates a tariff.On the graph,Q represents quantity and P represents price. -Refer to Figure 9-16.The area C + D + E + F represents A) the decrease in consumer surplus caused by the tariff. B) the decrease in total surplus caused by the tariff. C) the deadweight loss of the tariff minus government revenue raised by the tariff. D) the deadweight loss of the tariff plus government revenue raised by the tariff.

A quota is A) a tax placed on imports. B) a limit on the quantity of imports. C) a tax on exports to other countries. D) an excess of exports over imports.

Both tariffs and import quotas A) increase the quantity of imports and raise the domestic price of the good. B) increase the quantity of imports and lower the domestic price of the good. C) decrease the quantity of imports and raise the domestic price of the good. D) decrease the quantity of imports and lower the domestic price of the good.

A major difference between tariffs and import quotas is that A) tariffs create deadweight losses,but import quotas do not. B) tariffs help domestic consumers,and import quotas help domestic producers. C) tariffs raise revenue for the government,but import quotas create surplus for those who get the licenses to import. D) All of the above are correct.

Tariffs and quotas are different in the sense that A) tariffs cause deadweight losses,while quotas do not cause deadweight losses. B) tariffs raise revenue for the government,while quotas do not raise revenue for the government. C) tariffs enhance the well-being of domestic consumers,while quotas diminish the well-being of domestic consumers. D) tariffs enhance the well-being of domestic producers,while quotas diminish the well-being of domestic producers.

Import quotas and tariffs produce similar results.Which of the following is not one of those results? A) The domestic price of the good increases. B) Consumer surplus of domestic consumers increases. C) Producer surplus of domestic producers increases. D) A deadweight loss is experienced by the domestic country.

Import quotas and tariffs produce some common results.Which of the following is not one of those common results? A) Total surplus in the domestic country falls. B) Producer surplus in the domestic country increases. C) The domestic country experiences a deadweight loss. D) Revenue is raised for the domestic government.

An import quota A) is preferable to a tariff since an import quota does not create a deadweight loss. B) is a tax on imported goods. C) reduces the welfare of domestic consumers. D) reduces the welfare of domestic producers.

The nation of Zelzar has decided to end its policy of not trading with the rest of the world.When it ends its trade restrictions,it discovers that it is importing incense,exporting steel,and neither importing nor exporting rugs.We can conclude that Zelzar's new free-trade policy has A) increased consumer surplus and producer surplus in the incense market. B) increased consumer surplus in the steel market and left producer surplus in the rug market unchanged. C) decreased consumer surplus in both the steel and rug markets. D) decreased consumer surplus in the steel market and increased total surplus in the incense market.

The nation of Aquilonia has decided to end its policy of not trading with the rest of the world.When it ends its trade restrictions,it discovers that it is importing rice,exporting steel,and neither importing nor exporting TVs.We can conclude that producer surplus in Aquilonia is now A) higher in the steel market,lower in the rice market,and unchanged in the TV market. B) higher in the rice and steel markets,and unchanged in the TV market. C) lower in the rice and TV markets,and higher in the steel market. D) lower in the rice and steel markets,and the same in the TV market.

Aquilonia has decided to end its policy of not trading with the rest of the world.When it ends its trade restrictions,it discovers that it is importing incense,exporting steel,and neither importing nor exporting rugs.Which groups in Aquilonia are better off as a result of the new free-trade policy? A) producers of incense and consumers of steel B) consumers of all three goods C) consumers of incense and producers of rugs D) producers of steel and consumers of incense

The United States has imposed taxes on some imported goods that have been sold here by foreign countries at below their cost of production.These taxes A) benefit the United States as a whole,because they generate revenue for the government.In addition,because the goods are priced below cost,the taxes do not harm domestic consumers. B) benefit the United States as a whole,because they generate revenue for the government and increase producer surplus. C) harm the United States as a whole,because they reduce consumer surplus by an amount that exceeds the gain in producer surplus and government revenue. D) harm the United States as a whole,because they reduce producer surplus by an amount that exceeds the gain in consumer surplus and government revenue.

Some goods can be produced at low cost only if they are produced in large quantities.This phenomenon is called A) marginal cost of production. B) marginal benefit of size. C) economies of scale. D) economies of production.

Relative to a situation in which domestic firms do not compete with foreign firms,firms in countries that engage in free trade A) can realize economies of scale more fully. B) have greater market power. C) experience larger producer surplus. D) All of the above are correct.

Figure 9-17 -Refer to Figure 9-17.Without trade,consumer surplus is A) $100 and producer surplus is $50. B) $100 and producer surplus is $200. C) $400 and producer surplus is $50. D) $400 and producer surplus is $200.

Figure 9-17 -Refer to Figure 9-17.With free trade,consumer surplus is A) $100 and producer surplus is $50. B) $100 and producer surplus is $200. C) $400 and producer surplus is $50. D) $400 and producer surplus is $200.

Figure 9-17 -Refer to Figure 9-17.With trade and a tariff,consumer surplus is A) $202 and producer surplus is $50. B) $202 and producer surplus is $98. C) $256 and producer surplus is $50. D) $256 and producer surplus is $98.

Figure 9-17 -Refer to Figure 9-17.Without trade,total surplus is A) $150. B) $300. C) $450. D) $600.

Figure 9-17 -Refer to Figure 9-17.With free trade,total surplus is A) $150. B) $300. C) $450. D) $600.

Figure 9-17 -Refer to Figure 9-17.With trade and a tariff,total surplus is A) $306. B) $354. C) $378. D) $426.

Figure 9-17 -Refer to Figure 9-17.With free trade,the country imports A) 5 units of the good. B) 10 units of the good. C) 15 units of the good. D) 20 units of the good.

Figure 9-17 -Refer to Figure 9-17.The imposition of the tariff A) decreases imports of the good by 4 units and increases domestic production of the good by 2 units. B) decreases imports of the good by 4 units and increases domestic production of the good by 4 units. C) decreases imports of the good by 6 units and increases domestic production of the good by 2 units. D) decreases imports of the good by 6 units and increases domestic production of the good by 6 units.

Figure 9-17 -Refer to Figure 9-17.The amount of revenue collected by the government from the tariff is A) $8. B) $72. C) $180. D) $252.

Figure 9-17 -Refer to Figure 9-17.The deadweight loss caused by the tariff is A) $24. B) $72. C) $96. D) $150.

Figure 9-17 -Refer to Figure 9-17.When comparing no trade to free trade,the gain from trade is A) $72. B) $100. C) $150. D) $450.

Figure 9-17 -Refer to Figure 9-17.When the country moves from no trade to free trade,consumer surplus A) increases by $300 and producer surplus increases by $150. B) increases by $300 and producer surplus decreases by $150. C) decreases by $300 and producer surplus increases by $150. D) decreases by $300 and producer surplus decreases by $150.

Figure 9-17 -Refer to Figure 9-17.When the country moves from free trade to trade and a tariff,consumer surplus A) decreases by $144 and producer surplus does not change. B) decreases by $144 and producer surplus increases by $48. C) decreases by $198 and producer surplus does not change. D) decreases by $198 and producer surplus increases by $48.

When a certain nation abandoned a policy of prohibiting international trade in automobiles in favor of a free-tree policy,the result was that the country began to import automobiles.The change in policy improved the well-being of that nation in the sense that A) both producers of automobiles and consumers of automobiles in that nation became better off as a result. B) the gains to automobile producers in that nation exceeded the losses of the automobile consumers in that nation. C) the gains to automobile consumers in that nation exceeded the losses of the automobile producers in that nation. D) even though total surplus in that nation decreased,it was still true that consumer surplus and producer surplus increased.

After a certain nation changed its policy from one that banned international trade in wheat to one that allowed international trade in wheat,the nation began importing wheat.As a result,total surplus in the wheat market increased by $10 million.Which of the following changes could have occurred as well? A) The price of wheat in that nation increased with the adoption of the new policy. B) The domestic quantity of wheat supplied increased with the adoption of the new policy. C) Consumer surplus in the wheat market increased by $7 million and producer surplus in the wheat market increased by $3 million. D) Consumer surplus in the wheat market increased by $15 million and producer surplus in the wheat market decreased by $5 million.

When the nation of Isoland opens up its steel market to international trade,that change A) creates winners and losers,regardless of whether Isoland ends up exporting or importing steel. B) results in a decrease in total surplus,regardless of whether Isoland ends up exporting or importing steel. C) creates winners,but no losers,if Isoland ends up exporting steel. D) creates losers,but no winners,if Isoland ends up importing steel.

Some time ago,the nation of Republica opened up its paper market to international trade.Which of the following results of this policy change is consistent with the notion that Republica has a comparative advantage over other countries in producing paper? A) The price of paper in Republica decreased as a result of the policy change. B) Republica began exporting paper as a result of the policy change. C) The domestic demand curve for paper shifted to the right as a result of the policy change. D) The domestic quantity of paper demanded increased as a result of the policy change.

Domestic producers of a good become better off,and domestic consumers of a good become worse off,when a country begins allowing international trade in that good and A) the country becomes an importer of the good as a result. B) the world price exceeds the domestic price of the good that prevailed before international trade was allowed. C) other countries have a comparative advantage,relative to the country in question,in producing the good. D) total surplus does not change as a result.

Figure 9-18.On the diagram below,Q represents the quantity of peaches and P represents the price of peaches.The domestic country is Isoland. -Refer to Figure 9-18.If Isoland allows international trade and if the world price of peaches is $5,then A) Isoland has a comparative advantage,relative to other countries,in producing peaches. B) Isoland will import peaches. C) consumer surplus with trade exceeds consumer surplus without trade. D) All of the above are correct.

Figure 9-18.On the diagram below,Q represents the quantity of peaches and P represents the price of peaches.The domestic country is Isoland. -Refer to Figure 9-18.If Isoland allows international trade and if the world price of peaches is $3,then A) Isoland has a comparative advantage,relative to other countries,in producing peaches. B) Isoland will export peaches. C) producer surplus with trade exceeds producer surplus without trade. D) consumer surplus with trade exceeds consumer surplus without trade.

Figure 9-18.On the diagram below,Q represents the quantity of peaches and P represents the price of peaches.The domestic country is Isoland. -Refer to Figure 9-18.If Isoland allows international trade,then it will be an exporter of peaches if and only if the world price of peaches is A) above $2. B) below $4. C) above $4. D) below $7.

Figure 9-18.On the diagram below,Q represents the quantity of peaches and P represents the price of peaches.The domestic country is Isoland. -Refer to Figure 9-18.If Isoland allows international trade and the world price of peaches is $5,then A) producer surplus will be smaller than it would be if Isoland banned trade. B) consumer surplus will be smaller than it would be if Isoland banned trade. C) the domestic quantity of peaches demanded will exceed the domestic quantity of peaches supplied. D) Isoland will be an importer of peaches.

Figure 9-18.On the diagram below,Q represents the quantity of peaches and P represents the price of peaches.The domestic country is Isoland. -Refer to Figure 9-18.Suppose Isoland changes from a no-trade policy to a policy that allows international trade.If the world price of peaches is $5,then the policy change results in A) a decrease in consumer surplus. B) an increase in producer surplus. C) an increase in total surplus. D) All of the above are correct.

Figure 9-18.On the diagram below,Q represents the quantity of peaches and P represents the price of peaches.The domestic country is Isoland. -Refer to Figure 9-18.Suppose Isoland changes from a no-trade policy to a policy that allows international trade.If the world price of peaches is $5,then the policy change results in a A) $25 decrease in consumer surplus. B) $20 increase in consumer surplus. C) $25 decrease in producer surplus. D) $20 increase in producer surplus.

Figure 9-18.On the diagram below,Q represents the quantity of peaches and P represents the price of peaches.The domestic country is Isoland. -Refer to Figure 9-18.Suppose Isoland changes from a no-trade policy to a policy that allows international trade.If the world price of peaches is $3,then the policy change results in a A) $15.00 decrease in producer surplus. B) $45.00 increase in consumer surplus. C) $20.00 increase in total surplus. D) $12.50 increase in total surplus.

Suppose a certain country imposes a tariff on a good.Which of the following results of the tariff is possible? A) Consumer surplus decreases by $100;producer surplus increases by $100;and government revenue from the tariff amounts to $50. B) Consumer surplus decreases by $200;producer surplus increases by $100;and government revenue from the tariff amounts to $50. C) Consumer surplus increases by $100;producer surplus decreases by $200;and government revenue from the tariff amounts to $50. D) Consumer surplus decreases by $50;producer surplus increases by $200;and government revenue from the tariff amounts to $150.

Suppose France imposes a tariff on wine of 3 euros per bottle.If government revenue from the tariff amounts to 30 million euros per year and if the quantity of wine supplied by French wine producers,with the tariff,is 8 million bottles per year,then we can conclude that A) the quantity of wine demanded by France,with the tariff,is 18 million bottles per year. B) the quantity of wine demanded by France,without the tariff,would be 24 million bottles per year. C) the amount of the deadweight loss is 24 million euros per year. D) the tariff causes French buyers of wine to pay 2 euros more per bottle than they would pay without the tariff.

For a country that is considering the adoption of either a tariff or an import quota on a particular good,an important difference is that A) an import quota has no effect on consumer surplus,while a tariff decreases consumer surplus. B) an import quota has no effect on producer surplus,while a tariff decreases producer surplus. C) a tariff raises total surplus,while an import quota does not. D) a tariff raises revenue for that country's government,while an import quota does not.

For any country that allows free trade, A) domestic quantity demanded is equal to domestic quantity supplied at the world price. B) domestic quantity demanded is greater than domestic quantity supplied at the world price. C) both producers and consumers in that country gain when domestic products are exported,but both groups lose when foreign products are imported. D) the domestic price is equal to the world price.

Figure 9-19.On the diagram below,Q represents the quantity of textiles and P represents the price of textiles. -Refer to Figure 9-19.With free trade,the country for which the figure is drawn will A) export 30 units of textiles. B) export 50 units of textiles. C) import 30 units of textiles. D) import 50 units of textiles.

Figure 9-19.On the diagram below,Q represents the quantity of textiles and P represents the price of textiles. -Refer to Figure 9-19.With free trade,consumer surplus in the textile market amounts to A) $210. B) $320. C) $405. D) $910.

When a country abandons a no-trade policy,adopts a free-trade policy,and becomes an exporter of a particular good, A) consumer surplus increases and total surplus increases in the market for that good. B) consumer surplus increases and total surplus decreases in the market for that good. C) consumer surplus decreases and total surplus increases in the market for that good. D) consumer surplus decreases and total surplus decreases in the market for that good.

When a country abandons a no-trade policy,adopts a free-trade policy,and becomes an exporter of a particular good, A) producer surplus increases and total surplus increases in the market for that good. B) producer surplus increases and total surplus decreases in the market for that good. C) producer surplus decreases and total surplus increases in the market for that good. D) producer surplus decreases and total surplus decreases in the market for that good.

When a country abandons a no-trade policy,adopts a free-trade policy,and becomes an importer of a particular good, A) consumer surplus increases and total surplus increases in the market for that good. B) consumer surplus increases and total surplus decreases in the market for that good. C) consumer surplus decreases and total surplus increases in the market for that good. D) consumer surplus decreases and total surplus decreases in the market for that good.

When a country abandons a no-trade policy,adopts a free-trade policy,and becomes an importer of a particular good, A) producer surplus increases and total surplus increases in the market for that good. B) producer surplus increases and total surplus decreases in the market for that good. C) producer surplus decreases and total surplus increases in the market for that good. D) producer surplus decreases and total surplus decreases in the market for that good.

When a country that exported a particular good abandons a free-trade policy and adopts a no-trade policy, A) consumer surplus increases and total surplus increases in the market for that good. B) consumer surplus increases and total surplus decreases in the market for that good. C) consumer surplus decreases and total surplus increases in the market for that good. D) consumer surplus decreases and total surplus decreases in the market for that good.

When a country that exported a particular good abandons a free-trade policy and adopts a no-trade policy, A) producer surplus increases and total surplus increases in the market for that good. B) producer surplus increases and total surplus decreases in the market for that good. C) producer surplus decreases and total surplus increases in the market for that good. D) producer surplus decreases and total surplus decreases in the market for that good.

When a country that imported a particular good abandons a free-trade policy and adopts a no-trade policy, A) consumer surplus increases and total surplus increases in the market for that good. B) consumer surplus increases and total surplus decreases in the market for that good. C) consumer surplus decreases and total surplus increases in the market for that good. D) consumer surplus decreases and total surplus decreases in the market for that good.

Congressman Smith cites the "jobs argument" when he argues in favor of restrictions on trade;he argues that everything can be produced at lower cost in other countries.The likely flaw in Congressman Smith's reasoning is that he ignores the fact that A) there is no evidence that any worker ever lost his or her job because of free trade. B) unemployment of labor is not a serious problem relative to other economic problems. C) the gains from trade are based on comparative advantage. D) the gains from trade are based on absolute advantage.